Commonwealth Consolidated Acts

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INCOME TAX ASSESSMENT ACT 1997 - SECT 170.135

The loss company

             (1)  The loss company:

                     (a)  must be an Australian resident (but not a * prescribed dual resident) throughout the capital loss year; and

                     (b)  must not be a * dual resident investment company in either the capital loss year or the application year.

             (2)  It must be the case that the loss company was not required to calculate the * net capital loss:

                     (a)  under section 165-114 (because of a change in ownership or control); or

                     (b)  under section 175-75 (because of an injected capital gain or loss).

             (3)  Also, it must be the case that neither Subdivision 165-CA nor Subdivision 175-CA would have prevented the loss company from applying the * net capital loss in working out its * net capital gain for the application year if it had made enough * capital gains in that year.

Note 1:       Subdivision 165-CA deals with the consequences of changing ownership or control of a company. Subdivision 175-CA deals with using a company's net capital losses to avoid income tax.

Note 2:       Division 707 affects the operation of Subdivision 165-CA if the loss company made the net capital loss because of a transfer under Subdivision 707-A.

Note 3:       A company's net capital gain or net capital loss for an income year is usually worked out under section 102-5 or 102-10.



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